Indiana Department of Environmental Management Issues Air Permit for Duke Energy Coal Gasification Power Plant

PLAINFIELD, IND. - The Indiana Department of Environmental Management today approved the air permit for a 630-megawatt coal gasification power plant planned at Edwardsport Station in southwest Indiana.

“We have an opportunity to make history with the Edwardsport plant,” said James L. Turner, president and chief operating officer, Duke Energy U.S. Franchised Electric and Gas. “The facility could very well be one of the cleanest coal-fired power plants in the world. It will produce nearly 10 times as much energy as the existing Edwardsport plant with much less environmental impact.”

The plant will use “integrated gasification combined cycle technology,” a coal gasification system to convert coal into a synthesis gas (syngas). The syngas is processed to remove sulfur, mercury and particulates before being sent to a traditional combined cycle power plant. The plant uses two combustion turbines and a steam turbine to efficiently produce electricity.

“The decision on the air permit is the last approval we needed to start construction,” said Duke Energy Indiana President Jim Stanley. “Thanks to state leadership, federal support, and unwavering local enthusiasm, southwest Indiana will be home to the nation’s first power plant to use coal gasification technology on this scale.”

Due to be completed by 2012, the new plant will replace four older, less efficient generating units capable of generating approximately 160 megawatts at the Edwardsport site. Some construction site work is expected to begin in about two weeks, and major construction will begin in the spring. An average of 800 to 900 construction workers over a three-year period, with a peak work force of approximately 2,000, will be needed. Ongoing plant operations will employ about 100 people.

The plant will cost approximately $2 billion to construct. That cost will be offset by more than $460 million in future local, state and federal tax incentives. The plant will result in an average electric rate increase of approximately 16 percent phased in from 2008 through 2012.

Climate Change Technology
The Edwardsport project also shows strong potential for the future addition of carbon capture and storage technology – one of the most promising solutions to how to address climate change while still using coal to produce electricity. The technology could remove carbon dioxide from coal during the syngas conversion process and then store or sequester it deep underground in geologic formations. Duke Energy will be filing with the Indiana Utility Regulatory Commission plans for a carbon capture and sequestration study of a portion of the plant’s carbon emissions. If it proves to be feasible, carbon dioxide capture and storage equipment could be added to the plant.

“This could be one of the first demonstrations of carbon capture and storage at a power plant,” said Duke Energy President Jim Stanley. “This project is technologically important not just for Indiana, but for the nation.”

Duke Energy must build new generation capacity to meet its legal obligation to serve increasing customer needs. The Indiana State Utility Forecasting Group estimates statewide electric usage will grow at rate of about 2.5 percent annually over the next 20 years. Duke Energy also is aggressively pursuing energy efficiency and renewable energy technology to help meet the energy demand.

Duke Energy’s Indiana operations provide approximately 7,300 megawatts of safe, reliable and competitively priced electricity to more than 770,000 electric customers, making it the state’s largest electric supplier.

Duke Energy, one of the largest electric power companies in the United States, supplies and delivers energy to approximately 4 million U.S. customers. The company has nearly 37,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky. In addition, Duke Energy has more than 4,000 megawatts of electric generation in Latin America, and is a joint-venture partner in a U.S. real estate company.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.